Stock a Has an Expected Return of 12%, a Beta

question 93

Multiple Choice

Stock A has an expected return of 12%, a beta of 1.2, and a standard deviation of 20%.Stock B also has a beta of 1.2, but its expected return is 10% and its standard deviation is 15%.Portfolio AB has $900,000 invested in Stock A and $300,000 invested in Stock B.The correlation between the two stocks' returns is zero Which of the following statements is CORRECT?

• A)Portfolio AB's standard deviation is 17.5%.
• B)The stocks are not in equilibrium based on the CAPM; if A is valued correctly, then B is overvalued.
• C)The stocks are not in equilibrium based on the CAPM; if A is valued correctly, then B is undervalued.
• D)Portfolio AB's expected return is 11.0%.
• E)Portfolio AB's beta is less than 1.2.

Understand the legalization and significance of union organizing with the Norris-LaGuardia Act.

Recognize the Civil Rights Act of 1964 as a significant governmental regulation of employer-employee relationships.

Identify the employment provisions under the Immigration Reform and Control Act.

Understand the impact of health-related legislation on state regulations and the formation of HMOs.

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Definitions:

Motivational Interviewing

A counseling approach that helps individuals resolve ambivalent feelings and insecurities to find the internal motivation needed for change.

Resistance

In psychotherapy, it refers to the patient's unconscious defense mechanisms that block the progress of therapy.

Defensiveness

A psychological reaction characterized by a refusal to accept criticism or the suggestion of fault, often as a mechanism to protect one's ego.

Meta-analysis

A statistical technique used to combine the results of multiple studies on a specific topic to derive a consolidated finding.